1. Federal Medicare Prescription Drug Coverage Sam Shore Center for Policy and Innovation DSHS

2. 2 Medicare Prescription Drug Program: New Medicare Part D New Medicare drug benefit starts January 2006 New Part D offers optional drug coverage to all Medicare beneficiaries Rx coverage provided through private drug plans or Medicare HMOs (Medicare Advantage) Limited to private plans formulary Changes Medicaid coverage for Medicare beneficiaries with Medicaid Rx coverage

3. 3 Medicare Prescription Drug Program Medicaid Changes effective January 1, 2006 Rx coverage for dual eligibles will be turned off 1/1/06 CMS will facilitate enrollment of dual eligibles into Part D plans. States make monthly payment to CMS New law prohibits states from drawing federal funds for drugs for dual eligibles

4. 4 Medicare Prescription Drug Program: Dual Eligibility Dual Eligibility refers to individuals who are: Medicare eligible (aged or disabled); Low income; and Also eligible for some level of Medicaid coverage There are different types of dual eligibility, but generally, they fall into two categories: Full dual eligibles Other dual eligibles

5. 5 Medicare Prescription Drug Program: Dual Eligibility Full Dual Eligibles: Entitled to Medicaid benefits that Medicare does not cover, including Medicaid drug coverage Include low-income aged and disabled individuals in community, waiver programs, nursing homes, and state schools Other Dual Eligibles: Eligible only for Medicaid payments for Medicare premiums, deductibles, and coinsurance for Medicare services Not entitled to Medicaid prescription drugs services (1929b) Include several categories of eligibility; incomes generally up to 135% of federal poverty level (if not in institution)

6. 6 How Many Medicaid clients are affected? (as of 2/1/05) 456 8 28 492 46,520 118,254 165,266 In nursing facilities In state schools In community-based ICFs/MR Total in institutions 1929B clients Other clients (QMB,SLMB,QI-1) Total non-full duals Non-Full Dual Eligible Clients: 57,650 3,450 4,053 65,153 251,333 316,486 In nursing facilities In State Schools In community based ICFs/MR Total in institutions Total in the community Total full dual eligibles Full Dual eligible clients:

7. 7 How Does Part D Coverage Work? Standard Benefit (All Medicare Beneficiaries) Beneficiaries pay monthly premiums (estimated at $35 in 2006) Based on annual amount of drug costs, beneficiaries may pay a significant portion: Deductible (first $250 of drug costs) 25% of drug costs between $250 and $2250 100% of drug costs between $2250 and $5100 (no Medicare coverage = gap); premiums continue Copayments or 5% of drug costs after $5100;* Medicare pays 95% *At $5100 of drug costs, beneficiary has paid $3600 in out-of-pocket spending, not including premiums

8. 8 Medicare Prescription Drug Program: Part D-Beneficiary Cost Sharing Example Standard Benefit – Individual with $500 per month ($6000 annually) Total Out of Pocket = $3645 (61%);Does not include premiums

9. 9 Medicare Prescription Drug Program: Part D Low-Income Subsidies Subsidies eliminate or lower premium, out-of-pocket cost sharing for low income beneficiaries Based on Income and Asset Test Premium subsidies– No premiums or deductibles for all dual eligible Medicaid clients and some low income, Medicare beneficiaries Sliding scale subsidies for other low income beneficiaries Cost sharing subsidies- No gap in coverage for all dual eligible Medicaid clients and some low income Medicare-only individuals Copays from $1 to $5 for all dual eligibles and some low income Medicare-only individuals

10. 10 Formulary Guidance 6 Drug Classes of special interest Anticonvulsants Antipsychotics Antidepressants Chemotherapy HIV/AIDS Drugs Immunosuppressants

11. 11 Low-Income Subsidy Groups No copay after total drug expenses reach $5,100 in 2006. $2 generic and $5 brand $2-$5 cost sharing (generic/brand) 15% of the cost of the covered drug - no premium -no deductible -sliding premium -$50 deductible New low-income subsidy groups: Up to 135% FPL 135% to 150% FPL No cost sharing No premium No deductible All dual eligible clients in institutions No copay after total drug expenses reach $5,100 in 2006 Less than 100% FPL, $1-$3 (generic/brand) Over 100% FPL, $3-$5 (generic/brand) No premium No deductible Full and Non-Full Duals Catastrophic coverage Cost SharingPremium & Deductible Population

12. 12 Outreach Campaign Multi-phased message platform –Awareness (January–June 2005) Let all affected parties know Part D is coming –Decision (July–December 2005) Activate beneficiary decision-making –Urgency (January–June 2006) Target Beneficiaries that have not yet enrolled in order to avoid increased premiums and lack of coverage

13. 13 HHSC Communications Strategy Beneficiaries most likely source of info on Medicare Part D: (source: Kaiser Family Foundation Focus Groups) –Medicare –Pharmacists –Physicians HHSC also knows (for dual eligibles): –who they are –where they live –Most go to the pharmacy to get their prescriptions filled

14. 14 HHSC Communications Plan: Target Audiences Clients –Full Dual Eligibles –Non-Full duals –Medicare-only clients in state-funded Rx programs (Kidney Health, New Generation mental health medications, HIV/AIDS) Providers –Pharmacists –Physicians –Institutional providers (Nursing homes, ICF/MRs) Staff –Caseworkers and other front-line staff in all HHS agencies

15. 15 HHSC Communications Strategy Materials and Activities Provider-Directed Activities Education –Articles for newsletters –Briefings for members –Training materials Materials (based on available funding) –High interest direct mail –Push cards –Brochures 17

16. 16 Medicare Part D: Key Dates in the Implementation Timeline July 1, 2005 States begin accepting applications for LIS September 2005: CMS awards bids to PDPs and MA-PDs October 2005:CMS to notify full dual eligibles and States of Part D plan assignment. October 15, 2005: CMS to disseminate information comparing Part D plans via mail and 1-800-Medicare November 15, 2005Enrollment period for Part D plan selection opens (runs through May 15, 2006 in first year only). December 31, 2005: Medicaid prescription drug coverage for dual eligibles ends. January 1, 2006:Medicare Part D drug coverage program begins May 15, 2006Open Enrollment ends June 1, 2006Facilitated enrollment of LIS beneficiaries 18

17. 17 Policy Implications for DSHS Programs Programs that serve people who are Medicare Part D eligible must make sure that their rules: –require clients to enroll in Medicare Part D –deny state benefits for Rx where Medicare Part D will cover –allow supplementation with state dollars in certain situations

18. 18 Medicare Part D-will impact approximately 40,000 persons served in DSHS Programs HIV –Approximately 1,000 CSHCN –Approximately 30 Mental Health Services –Approximately 18,000 Primary Health Care –Approximately 6,000 Kidney Health –Approximately 15,000

19. 19 Texas HIV Medication Program Provides life sustaining medications to treat HIV disease and it's associated opportunistic infections for low income Texans. Program eligibility criteria: –HIV positive –Texas resident –Gross income < 200% of the federal poverty level –Uninsured or underinsured for prescription medications 13,107 clients enrolled in FY04 Approximately 8%(1,049) have Medicare

20. 20 Children with Special Health Care Needs Services Program CSHCN provided medical services to 1,909 clients in FYO4 –Texas residents under 21 with a chronic physical or developmental condition, or who are adults with cystic fibrosis –Family income at or below 200% federal poverty Specific services: –Medical, dental, and case management services –Some wrap-around services for persons with other health coverage –Enabling services, family support services, and systems development

21. 21 Community Mental Health Services Provides Community-Based Mental Health services including Medications Primarily serves adults with Schizophrenia, Bipolar Disorder and Major Depression and Children and Adolescents with Serious Emotional Disorders Serves approximately 150,000 adults and 30,000 C&A each year

22. 22 Kidney Health Care Kidney Health Care served over 18,400 recipients in FY04 –Texas residents with end-stage renal disease (ESRD) diagnosis, not Medicaid eligible, gross income less than $60,000 annually –Patients are of all ages and ethnic groups Specific Services: –Four drugs a month (34-day supply); $6 co-pay per drug; –Travel reimbursement up to 13 round trips monthly –Allowable dialysis and access surgery services

23. 23 Primary Health Care Provides primary and preventive health services to individuals at or below 150% FPL who do not have access to services through other programs or funding sources. Services are provided by public and private non-profit agencies through a competitive RFP process. Priority services include: diagnosis and treatment, emergency services, family planning, preventive services such as immunizations and prenatal care, laboratory and x-ray and health education. Approximately 82,600 clients were served by 56 contractors in FY04.